S. 3826: Litigation Funding Transparency Act of 2026

The Litigation Funding Transparency Act of 2026 aims to improve transparency and oversight regarding third-party funding in certain legal cases, specifically class actions and other mass actions. Here's a breakdown of its main provisions:

Definitions

• Third-party Funder: This term refers to any business or foreign entity that provides financial support for a party involved in certain types of civil litigation.
• Covered Civil Action: This includes class actions, actions consolidated in multidistrict litigation, or those involving at least 100 individual cases.
• Exclusions: Nonprofit organizations that fund civil actions pro bono with domestic donations are excluded from these provisions.

Disclosure Requirements

In any covered civil action, involved parties must:

• Identify any third-party funders to the court and all other parties.
• Disclose whether any of these funders are foreign entities.
• Provide copies of any agreements regarding the funding to the court unless directed otherwise.
• Submit these disclosures within ten days of signing the relevant agreement or at the time of filing the action.

Duties and Enforcement

Parties must correct any disclosures that become incomplete or incorrect and are subject to rules governing sanctions for failing to comply with these disclosure requirements. The obligations will be aligned with existing rules under the Federal Rules of Civil Procedure.

Litigation Strategy Control

The act prohibits third-party funders from exerting influence over litigation decisions, strategies, or settlements, and violating this provision can lead to contempt of court.

Protection of Sensitive Information

Third-party funders are restricted from accessing discovery materials that are protected under court orders, ensuring confidentiality during the legal process.

Reporting Requirements

The Administrative Office of the United States Courts must report periodically on the third-party funders identified in civil actions, detailing their names, the monetary support provided, and related case information.

Applicability

The provisions apply to all relevant cases that are pending or initiated after the act's enactment.

Relevant Companies

• None found